Given that Qd = 10 - 2p while Qs = 5 x 3P, if P = N 1 determine the equilibrium quantity
A. 7 B. 6 C. 5 D. 8
Correct Answer: D
Explanation
To get equilibrium price and quantity: i) Get function solved for Qs and Qd (quantity supplied) and Qd (quantity demanded) ii) Set Qs equal to Qd iii) Solve for P (equilibrium price) iv) Plug your P back into your Qs and Qd function to get the quantity. when, Qd = 10 2p and Qs = 5 + 3p if Qd = Qs then, 10 2p = 5 + 3p solving for p: 10 5 = 3p + 2p 5 = 5p p = 1 (given in the equation) Equilibrium Quantity will be gotten by plugging P into Qd and Qs respectively; Qd = 10 2p Qs = 5 + 2p = 10 2(1) = 5 + 3(1) = 10 2 = 5 + 3 = 8